Fund Objective

To produce a high level of income combined with a high degree of security.

View on Past Performance

For the year ended 31 July 2008 the total return on your units was 4.17%* compared to 3.28%* for the Finex Money Deposit 90 days Index and 3.96%* for the average fund in the Money Market Index. The Fund was ranked 16th out of 29 funds over the year and 13th out of 18 funds since launch in the Money Market sector.On 5 July 2007 the Monetary Policy Committee (MPC), as predicted, raised interest rates to 5.75%, the fifth rise since August 2006. At the time the consensus view amongst most commentators was that UK interest rates were likely to need to rise again in the latter part of the fourth quarter in order for the MPC to achieve its Government mandated inflation target based on the Consumer Prices Index (CPI) of 2%.However, at the end of July the financial markets became increasingly nervous and volatile. Shares in London and New York experienced some of the sharpest falls for nearly five years. The core concern related to fears of global contagion from defaults in the so-called subprime US mortgage markets and the negative impact on bank liquidity - the 'credit crunch'.On 13 September 2007 it was disclosed that the Bank of England had provided emergency funding to the beleaguered Northern Rock bank.

Future Expectations

CPI inflation soared unexpectedly to 4.4% in July, from 3.8% in June, and is now at its highest since April 1992. Although oil and commodity prices have fallen significantly over the past few weeks with transport, food, gas and electricity bills set to increase the pressure on household incomes will intensify over the rest of the year.The August Inflation Report forecast that the economy will stagnate over the next year but the rate of inflation, after peaking at about 5% in the coming months, will actually fall slightly below the target rate of 2% by 2010. On that basis and if wage inflation remains subdued the MPC should be able to shore up the economy in early 2009 with rate reductions. The short sterling market is projecting 0.5% of easing by March 2009.

Fund Details